Canada commits C$600 million to build Ottawa's light rail plan

The Canadian federal
government will contribute C$600 million to transform Ottawa's transit system,
making a switch from buses to light rail with a downtown tunnel through the
city's core and 12.5 kilometers (7.75 miles) of light rail between Blair Road
and Tunney's Pasture, local media report. Transport Minister John Baird made
the long-awaited announcement June 8, matching the funding already promised by
the Ontario government.

"We're now putting all
our eggs in one basket, but now these are the only eggs left," Baird said,
noting there won't be any more federal money for the project. The minister said
he expects the city to use the funding to put towards a "practical and
affordable" plan for the City of Ottawa.

The first phase of the
project was originally pegged at C$1.4 billion; then it climbed to C$1.8
billion. Now, the total cost for phase one is estimated at C$2.1 billion.

The city will be on the
hook for the $900-million funding shortfall. Although some question the
affordability of the project, city staff believes the city will be able to
cover its portion of funding without raising taxes. In October 2009, the city
treasurer put out a memo saying the city planned to pay for its share of
funding by a combination of development charges, gas tax funding, and the
existing transit portion of your property bill.

The $900-million investment
will be spread out over seven years. $435 million will come from development
charges, $375 million from gas tax revenues and $75 million from existing
property taxes.

However, some city councilors
remain skeptical about the cost of the project, noting the city's treasurer has
warned the true cost could be as much as 25 per cent more than the current
price tag.

Although Mayor Larry
O'Brien said the master plan for transit may be tweaked, he said the tunnel is
non-negotiable. If a downtown tunnel is not built, the city predicts it will
have to send an articulated bus through the downtown core at the rate of one
every 18 seconds to meet demand for transit by 2031. O'Brien said the current
plan is the one the city is going to move ahead with, noting that other levels
of government want to make sure the city makes an affordable choice.

"They want us to make
it work. They want us to make sure we're not delivering a Cadillac, when we can
deliver a Chevrolet. They want to make sure that we're being cost-effective,
and that the bidders, the private sector part of this process, that they've
sharpened their pencil right down to the point where we can fit it inside the
envelope of the funding we have," he said.

The city's current plan for
transit replaces a north-south light rail line that was cancelled following the
last municipal election. In September 2009, the city agreed to a $36.7-million
settlement with a consortium led by Siemens over the cancelled light rail
contract. At the time, the mayor said the cost of canceling the contract was a
better financial decision than going through with it.

"In 2006, we stopped a
plan that nobody liked. Today, we've started a plan that will solve problems in
transportation for the balance of this century," said O'Brien.

He predicts it will take
about one year to complete the procurement process of the new plan. Construction
on the first phase of the project is expected to begin in 2013, with a
completion date of 2018.